Estoppel

CORE DEFINITION

The principle of estoppel (also known as equitable estoppel, or estoppel in equity) is a general contract theory in common law systems. Its basic connotation is "My word is my bond." — meaning one should be consistent in words and deeds, and not go back on one's word. In traditional contract theory in common law countries, the formation or modification of a contract requires consideration to be enforceable. However, in practice, there are many cases where a person promises to give something to another or promises to do something for free, but later reneges, causing loss to the promisee. The promisee suffers loss but has no legal basis to prevent the promisor from exercising their rights. Before the 1940s, judges in common law countries solved this problem by using estoppel in equity and by searching for valid consideration as much as possible. This approach often led to far-fetched interpretations, increasing people's doubts about the fairness of the law.